Quick 3-Point Checklist for any Entrepreneur looking to venture into Distribution Business.
From centuries INDIA is known as a land of Entrepreneurs, Distribution is one of the oldest form of the business that exists. In centuries, very little have been changed until the dawn of 20th Century when computers made their prominent position on the desks of businesses worldwide.
However, Such long existence of this business model have made the business naturally competitive yet remarkably stable and highly resilient to the UPs and Downs of the economy. In this note, we would take a quick glance over some touchpoint’s and elaborate over this with posts in the next few days, exploring and discussing them further.
By Definition “Distributors works to move products from manufacturer to markets”. But today this is not the case and a distributor should make a significant value addition to the business and the brand. So, it becomes essential to have great I.T. Infrastructure (Technology) along with the good logistic capabilities.
There are several distribution models and opportunities in the market we are discussing Wholesale Distributors i.e. buying from the manufacturer and selling it to other business like Retail Shops and Wholesaler. According to India Brand Equity Foundation FMCG market in INDIA is expected to grow at a CAGR of 20.60 per cent and is expected to reach $103.7 billion by 2020 also by strengthening the distribution network and adding more distributors.
Here is the 3 Point Checklist for the Entrepreneurs looking to start their own wholesale distributorship.
1. Right Partner Brand
Having associated with the right partner would already have taken you halfway.
Serious companies today would believe in the Principles of LEAN, implementing Concepts like Just in Time. For Distributors this means less investments in inventory, Higher inventory rotations.
These endeavours are only enabled through use of Intelligent IT Solutions which should be able to filter out the noise, In the past with reference to the software’s they used to say, “Garbage in, Garbage out” i.e. output from a software is as good as data fed into it. Which is not the case today, So the partner brand should be forward looking and should make right decisions which would also affect you.
Also, Partner Brand’s policies regarding Market Credits, Infrastructure Requirement, Market Scheme Payout Handling, Retail Damage Settlements, etc matters the most and impacts distributors goodwill.
These are few criteria that would give you a fair idea to think over this point.
2. Right Investments
One of the prominent reason of failure of this venture is because the Entrepreneur fails to raise sufficient capital to fuel the growth of the business or in the first place starts with scanty funds. Also their willingness to invest in right amount of technology, Logistics, Training would matter the most.
3. Effective Operations
ROI in your business is a key indicator to track health of its operations and fundamentals. Utilising the available infrastructure efficiently, Becomes key part to determine success and failure of the venture.
Managing your logistics schedule, Warehouse Efficiency, Field Force Productivity, Market Credits, Inventory Management along with Inventory Optimisation, Payroll Management, GST Return Uploads, Banking, Accounting and Much more would be fluidly managed by this workhorse.
Leaving the Entrepreneur to work on things that matters more.
Unlike many businesses, Building a successful distribution business, being profitable and growing it to a scale may take couple of Quarter. There are exceptions of course, for example Entrepreneur making the right choices by choosing right technology, right markets and right partner brand would even start making money from the first month.
As discussed earlier there are different aspects that need to be explored and touched upon, We would be discussing them one after the other.
Meanwhile if you wish to know more or discuss any of them do leave us a comment and we would definitely try to take them up. Stay Tuned.